Arthur Andersen CEO Joseph Berardino resigns
Posted on 03/26/2002 2:56:13 PM PST by MeekOneGOP
Arthur Andersen CEO Joseph Berardino resigns
03/26/2002
CHICAGO - Arthur Andersen LLP chief executive Joseph Berardino resigned Tuesday, bowing to mounting pressure as a result of the company's role in the Enron scandal.
His announcement came four days after former Federal Reserve chairman Paul Volcker urged top management to step aside so he can install and head an independent board in a last-ditch plan to save the company.
The key element of Volcker's plan is the dismissal of a federal indictment against Andersen alleging obstruction of justice in destroying Enron-related documents. The Justice Department has not said whether it would consider such an action.
Berardino disclosed his decision late Tuesday as Andersen partners, in internal company e-mails, were stepping up pressure on him to quit. He said he would remain in charge temporarily until a successor is chosen.
"I felt I had to take this step today to put an exclamation point behind the voices of our people ... to say that we are serious and we're a serious firm that deserves to continue here in the United States," Berardino told CNN.
"We're in deep stress," he said of the 89-year-old Chicago firm.
Andersen has lost more than 70 clients this year in the wake of the scandal involving its auditing client Enron, and its overseas affiliates have been bolting to rival firms. Industry experts are doubtful whether Volcker's plan or any other can prevent the firm from folding.
Volcker, who heads an oversight committee charged with making sweeping reforms at the company, has also said a cap must be placed on Andersen's financial liability from the Enron scandal if it is to survive.
Andersen's 1,700 partners have been urging Berardino to resign, according to several partners interviewed Tuesday. Retired partners also have been pushing for his ouster in hopes it can help keep Andersen afloat.
Since the indictment, he hasn't communicated well with the partners.
His resignation, said Chicago-based partner Kathy Scherer, may be "the only way that the Justice Department might ease up" on Andersen.
"I'm not sure they would consider pulling the indictment," she said. "But to indict and try Paul Volcker would be difficult, given the man's standing."
Berardino, the head of Andersen since January 2001, also is managing partner-chief executive of Andersen Worldwide, the legal parent of Arthur Andersen.
A person familiar with the situation said Andersen's board is flying to London this week to talk about a succession plan, even as discussions continue about combining its non-U.S. operations with those of rival KPMG.
Before becoming CEO, Berardino was managing partner for the company's assurance and business advisory practice in North America. He has been with the firm since 1972.
The lead Anderson auditor and his immediate superiors in re Enron have managed to destroy a once great firm.
I believe that this will bring on a new age of serious oversight with all auditing firms, because this cooking the books bs is/and should be a criminal offense.
It must be me, but I'm having trouble visualizing that.
As far as accountants go, they basically rely on information provided by their clients and perform audits with client objectives in mind. If the client want's inflated numbers, the accountants will take a more aggressive approach.
If regulations allow you to lease my asset for $1,000,000,000 for me to lease your asset for $1,000,000,000 and for both of us to record revenue from the deal of $1,000,000,000 on-balance while locating the expense off-balance, is it really fair to blame the accountants? What were the financial analysts and financial journalists doing?
People will have to excuse me if I don't suddenly break down and weep tears of sympathy for these CEOs and VPs.
Enron has changed everything, unless our clinton/Country mentality has gone over the cliff.
I would sure hate to lose my wallet in a mall today vs 50 years ago. The odds would be extremely slim.
There is a BIG difference between a review and an audit. Enron paid Andersen $27 million a year for auditing their books. In addition they paid another $25 million for consultants. Andersen is in this up to their necks. They not only audited, they gave financial advice. This isn't some little $30,000 audit.
The FASB was/is a quasi governmental/professional group, making accounting rules, which usually influence the practice around the world.
Part of the problem, is that "self-regulation" cannot be effective, with no integrity.
The rules of the FASB are bought and paid for by industry. The loopholes are easy to jump through, to dupe the shareholder community. Enron did it. Arthur Andersen was simply the most flexible of the Big Five.
We haven't heard very much, about the specific accounting practices used. I suspect many other corps. use/used similar accounting.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.